Tort Law and the Sharing Economy

Six weeks ago, a UK employment tribunal declared that Uber drivers are employees. A few months before that, Uber settled two class action lawsuits in the US in order to avoid a ruling on whether drivers can remain independent contractors. And Uber regularly takes the position that it is not subject to the regulations that apply to taxi services. Sharing economy companies go to great lengths to shun traditional business models (and the legal and regulatory structures that come along with them). While regulation of the sharing economy remains a major issue, tort law is an important complementary concept – and the subject of my new article, Sharing Tort Liability in the New Sharing Economy.

Because sharing economy companies often avoid traditional employment relationships, they complicate the analysis under some long-standing tort law doctrine, particularly when a tort victim is negligently harmed by a worker in the gig economy. But traditional tort law concepts are already well-equipped to adapt to this new world of ad-hoc transactions. For ridesharing in particular, liability challenges may be solved with vicarious liability doctrines – especially joint enterprise liability. An Uber driver, for example, may be unable to bear the brunt of liability when a passenger, pedestrian, or other driver is negligently harmed. In the traditional economy, vicarious liability would solve the under-compensation problem. But sharing economy companies purport to merely “connect” providers with customers, thereby skirting the traditional relationships that would give rise to liability. 

Nonetheless, vicarious liability may still attach. First, respondeat superior applies if Uber drivers are deemed employees. Even if drivers are independent contractors, vicarious liability may still attach, such as when they are engaged in a non-delegable duty (like safety). But, at the very least, courts should consider joint enterprise liability: sharing economy companies embark on a joint venture with service providers for a shared profit motive, which could amount to a joint enterprise for the purposes of vicarious liability.

Regulatory challenges are certainly at the forefront of legal issues surrounding the sharing economy, but retrospective tort remedies can help minimize harm and prevent over-regulation. Further, tort law may prove even more important under an administration that vows to cut regulations across the board. Thus, a sound approach to dealing with the sharing economy involves a look at both tort law and regulation and, in my article, I suggest that vicarious liability principles be used liberally to ensure fairness and adequate compensation. By clarifying liability issues under tort law, we can enable policymakers to proceed with a holistic understanding of how retrospective tort remedies already address some of the unique issues in the sharing economy.